Pointer v. American Oil Company, IP 68-C-100.

• Decision Date: 22 January 1969
• Docket Number: No. IP 68-C-100.,IP 68-C-100.
• Parties: Herschel M. POINTER and James Pointer, Plaintiffs, v. The AMERICAN OIL COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Indiana

295 F. Supp. 573

Herschel M. POINTER and James Pointer, Plaintiffs, v. The AMERICAN OIL COMPANY, Defendant.

No. IP 68-C-100.

United States District Court S. D. Indiana, Indianapolis Division.

October 8, 1968.

Supplemental Entry January 22, 1969.

Daniel J. Harrigan, of Bayliff, Harrigan & Cord, Kokomo, Ind., for plaintiffs.

Geoffrey Segar, of Ice, Miller, Donadio & Ryan, Indianapolis, Ind., for defendant.

STECKLER, Chief Judge.

This cause came before the Court on the defendant's motion to dismiss the complaint on the ground that the complaint fails to state a claim upon which relief can be granted.

The complaint alleges that the plaintiffs leased from the defendant a "Standard" service station in Kokomo, Indiana, a copy of the lease being attached to the complaint and made a part thereof. Plaintiffs allege that the defendant was responsible for the maintenance, repair and/or replacement of the underground bulk tanks used for storing gasoline for resale at the station. It is alleged that when the plaintiffs leased the station (April 5, 1966), plaintiffs were billed for gasoline based upon the meter on the retail gasoline pump; that consequently plaintiffs were required to pay defendant only for the gasoline which actually went through the retail pumps. The complaint alleges that on and after May 1, 1966, plaintiffs were billed for the gasoline based upon the meter on the tanker trucks, and thus were billed on the basis of the gasoline which went into the storage tanks rather than the gasoline which went through the retail pumps. They assert that the change in the billing, and hence the transfer of the risk of loss due to faulty storage tanks, was made by the defendant without their advice and consent. Plaintiffs allege that on and after May 1, 1966, they commenced to lose money and that they complained to defendant's agent that they believed the tanks were leaking. Plaintiffs allege that they were repeatedly assured by the defendant that the leased equipment was sound and that plaintiffs' losses must be due to some other cause. It is alleged that after fifteen months of continual and repeated demands, the defendant caused various tests to be conducted on or about August 1, 1967, at which time it was confirmed that the storage tanks were leaking. The complaint states that the defendant replaced the tanks on or about August 1, 1967.

Plaintiffs allege that between May 1, 1966 and August 1, 1967, they were billed for 123,417 gallons of premium gasoline and during said period they pumped 98,864 gallons of premium gasoline, for a net loss of 24,553 gallons. Further, they allege that between May 1, 1966 and August 1, 1967, they were billed for 193,055 gallons of regular gasoline, and during said period they pumped 135,351 gallons, for a net loss of 57,704 gallons. They allege that they were charged 35½ cents per gallon for the premium gasoline, and 32 cents per gallon for the regular gasoline, resulting in an alleged total loss to them in the amount of $27,181.60.

The defendant bases its motion to dismiss on the holding in Loper v. Standard Oil Company, Ind.App., 211 N.E.2d 797 (1965). That case involved a lease with the same "hold harmless clause" as is contained in the lease between the parties to this action. Defendant argues that the cause of action as alleged by the plaintiff in the Loper case was almost identical to the cause of action alleged by the plaintiffs in this case, the only difference being that in the Loper case the lease involved a furnace, and in this case, "faulty storage tanks." The defendant points to the fact that the lease attached to the plaintiffs' complaint specifically lists the "underground tanks" as being within the lease provisions. In the Loper case it was also shown that at various times Standard (the sub-lessor) inspected the premises and made repairs at its own expense. In affirming the trial court's action sustaining the defendant's demurrer and judgment for the defendant, the Indiana Appellate Court ruled that the "hold harmless clause" indemnifying the landlord from liability for his own negligence was not against public policy.

In the Loper case, as in this case, the lessee agreed to keep the premises, buildings, and equipment, etc., in good order and repair. In that case Standard relied on the indemnification provision of the lease as a bar to the cause of action, the same as the defendant asserts in this action. In Loper, the Appellate Court agreed that such an indemnification provision was a bar to the action.

From the face of the complaint in the action before the court it is difficult to tell whether the plaintiffs rely on breach of an implied warranty that the tanks in question were reasonably fit for the purpose for which they were intended as a part of the lease, or whether they are relying on an action sounding in tort. In their brief the plaintiffs state:

"The instant case is not a casualty loss as such. It is based rather upon the implied agreement of the parties. It was understood from the outset that Standard Oil Company (sic) would replace or repair the permanent equipment located upon the demised premises."

The lease contains the following covenants:

"Lessee hereby covenants and agrees as follows:

1. That Lessee has examined and knows the condition of said premises and the buildings, equipment, machinery and appliances situated thereon, acknowledges that he has received the same in good order and repair (except as otherwise specified), and that no representations as to the condition or repair thereof have been made by Lessor or anyone representing Lessor.

2. That Lessee will pay all water, light and other operating expenses and will keep said premises, buildings, equipment, machinery and appliances, together with the adjoining sidewalks and entrance driveways in good order and repair; * * *

3. Lessor, its agents and employees shall not be liable for any loss, damage, injuries, or other casualty of whatsoever kind or by whomsoever caused, to the person or property of anyone (including Lessee) on or off the premises, arising out of or resulting from Lessee's use, possession or operation thereof, or from defects in the premises whether apparent or hidden, or from the installation, existence, use, maintenance, condition, repair, alteration, removal or replacement of any equipment thereon, whether due in whole or in part to negligent acts or omissions of Lessor, its agents or employees; and Lessee for himself, his heirs, executors, administrators, successors, and assigns, hereby agrees to indemnify and hold Lessor, its agents and employees, harmless from and against all claims, demands, liabilities, suits or actions (including all reasonable expenses and attorneys' fees incurred by or imposed on the Lessor in connection therewith) for such loss, damage, injury or other casualty. Lessee also agrees to pay all reasonable expenses and attorneys' fees incurred by Lessor in the event that Lessee shall default under the provisions of this paragraph.

* * * * * *

13. That no obligation, agreement or understanding on the part of either party to be performed shall be implied from any of the terms and provisions of this lease, all obligations, agreements and understandings being expressly set forth herein.

* * *"

It is difficult to reconcile the language of the lease with the statement in the plaintiffs' brief, "It was understood from the outset that Standard Oil Company (sic) would replace or repair the permanent equipment located upon the demised premises."

On a motion to dismiss, all facts well pleaded must be accepted as true; the pleader is entitled to the most favorable inferences and intendments to be drawn from the facts pleaded. All doubts should be resolved in favor of the pleader, that is to say, the case should go to answer and proofs, and not be disposed of on a motion...